Speaker 1: Welcome to How to Money. I'm Joel and I'm Matt,
Speaker 1: and today we're discussing actually buying a home. That's right, Joel.
Speaker 1: Last week we talked about everything you need to do
Speaker 1: before buying a house, and now this week we're talking
Speaker 1: about the actual house buying process, everything from submitting an
Speaker 1: offer all the way through to your closing date. Yeah,
Speaker 1: there's so many little things involved, Matt, and all of
Speaker 1: them are important in making sure that you buy a house. Well,
Speaker 1: so yeah, I'm looking forward to talking about that. Before
Speaker 1: we get to it, I wanted to let you know
Speaker 1: that one of our neighbors gave some hand me down
Speaker 1: bikes to my girls. His girl's had outgrown them. They
Speaker 1: got some new bikes, and so my girls have been
Speaker 1: super excited to ride bikes. And the weather has been
Speaker 1: a little bit warmer lately, so it's been really really
Speaker 1: fun getting out there and just kind of riding bikes
Speaker 1: with the girls because normally I put them on my
Speaker 1: bike and and that's a lot of fun, but it's
Speaker 1: so much fun just to watch them get into it
Speaker 1: on their own too. So yeah, we're really enjoying bike
Speaker 1: riding right now. It wasn't I on that text thread
Speaker 1: as well, where it was offered to you and me, Hey,
Speaker 1: you never and then and then he took both of
Speaker 1: them jerk, Hey, I offered after the fact, I did say,
Speaker 1: you're welcome to one. But you're pretty stocked on bikes
Speaker 1: over here. Yeah, actually, yeah, we've got some freebees as well.
Speaker 1: I keep kind of stashing them down to my basement
Speaker 1: down the cross space when the time comes and I'm
Speaker 1: gonna pull them out and hose them off. Get him
Speaker 1: nice and shining for the girls. Yeah, I think I
Speaker 1: saw you post a picture from from when you guys
Speaker 1: were riding. Was that during the week as well? We
Speaker 1: were kind of taken some time off from work. Yeah,
Speaker 1: I knocked off a little bit early. We we went
Speaker 1: to a biking path essentially, and and the girls had
Speaker 1: a blast. And there are a couple of playgrounds along
Speaker 1: the way that's the best. So yeah, we're like biking
Speaker 1: for a little while, stopping off at the playground, biking
Speaker 1: some more, stopping off. Yeah, the playground destination makes it
Speaker 1: worthwhile for the kiddos. I was asking though, because I
Speaker 1: think the same day I had family in town and
Speaker 1: I was a little bit nervous because I've got a
Speaker 1: lot of work on my plate these days, and to
Speaker 1: kind of be able to take that much time off
Speaker 1: during the day when I know that I'm typically working,
Speaker 1: and it was it was hard. I kind of had
Speaker 1: like a little panic attack when I realized that, oh, no,
Speaker 1: I'm not going to be able to get the things
Speaker 1: done that I need to get done today. But you
Speaker 1: know what I realized, I kind of reminded myself, back
Speaker 1: to the Mission Statement episode that we did with Scott,
Speaker 1: that having this kind of flexibility is important to me
Speaker 1: and to be able to pry myself away from my work,
Speaker 1: which is essentially what I have to do, uh is
Speaker 1: pride myself away, but to remind myself that, no, I
Speaker 1: need to spend time with my family. I need to
Speaker 1: spend time like you with your kids, just on a
Speaker 1: random day when when it's beautiful outside, and to give
Speaker 1: yourself that flexibility. And it's sort of like lifestyle shaping,
Speaker 1: like we know in our heads what we want our
Speaker 1: life to sort of look like. And it's weird to
Speaker 1: say this, but for me, man, it's it takes a
Speaker 1: lot of work to actually see it out and do
Speaker 1: the things that I know that I want to do
Speaker 1: on paper or in my head, but when it comes
Speaker 1: to my actual actions, it's really hard. So it's really
Speaker 1: difficult for me. And I don't know if that means
Speaker 1: I'm a workaholic or or what, but seeing you kind
Speaker 1: of do that was inspiring for for me, So so
Speaker 1: I appreciate that. Man. Yeah, no, I don't think you're
Speaker 1: alone in that at all. I think it's really hard
Speaker 1: for us to match up kind of our beliefs and
Speaker 1: what we hold dear to our actions. Sometimes that's a
Speaker 1: human tendency, right to to say that we value one thing,
Speaker 1: but in fact all these other things get in the
Speaker 1: way of us prioritizing the thing that we say we
Speaker 1: care about the most. And I think probably all of
Speaker 1: our listeners can resonate with that to a certain degree,
Speaker 1: that the things that we want to hold up as
Speaker 1: the most important things in our lives, we find ourselves
Speaker 1: answering emails when we should be spending time with our kids,
Speaker 1: or we find ourselves on our smartphones in bed when
Speaker 1: we should be having a nice moment with our spouse, right,
Speaker 1: or even just hopping back on the computer. Like for me,
Speaker 1: it's just after I take a shower at night, because
Speaker 1: that's how I roll take that night shower helps me
Speaker 1: feel all warm and cozy and clean, and then I
Speaker 1: then I go to bed. I gotta imagine you're in
Speaker 1: a low percentage of people that take showers at night. No, man,
Speaker 1: there's gotta be someone else out there. Just like the
Speaker 1: hot water thing. I think there's folks out there who
Speaker 1: also shower and it, but sometimes they're probably the same
Speaker 1: four people. But I know that if I get back
Speaker 1: on the computer for a little bit more and hammer
Speaker 1: out a few more emails or do some outlines or
Speaker 1: just some other work that I know it needs to happen.
Speaker 1: It's not just for ten minutes. It ends up being
Speaker 1: for thirty minutes or an hour, and then I stay
Speaker 1: up late, and it's it's not a priority of mine.
Speaker 1: I know, I want to try to go to bed sooner. Yeah,
Speaker 1: And I think that's why the mission statement is helpful,
Speaker 1: because it's that kind of kicking the pants, the reinforcement
Speaker 1: when you are doing something that essentially violates your mission statement.
Speaker 1: It's a reminder, right that general push to to actually
Speaker 1: live life according to the terms that you want, and
Speaker 1: not to just be pushed into a way of living
Speaker 1: by force. So I think it's good to be at
Speaker 1: least aware of it. You know, anytime there's a nice
Speaker 1: day like that, I think to myself, Man, this is
Speaker 1: a time where I could have the flexibility if I
Speaker 1: was more maybe diligent about getting my work done more
Speaker 1: efficiently and to take advantage of the flexibility I have.
Speaker 1: It's it's tricky, It's tough, all Joel. You want to
Speaker 1: introduce the beer for this episode, Yeah, Matt. Today on
Speaker 1: the show, we're drinking Boulevard Space Camper Cosmic I p A.
Speaker 1: So this is a brand new release from Boulevard Brewing Company,
Speaker 1: and our friend Hillary over there send us some of
Speaker 1: the spears, so we're excited to have it on the
Speaker 1: show today. Hillary, she's a listener and friend of the show.
Speaker 1: So we'll let you know what we think about the
Speaker 1: spear towards the end. And I'm excited to share this
Speaker 1: one with you today. Man, while we talk about buying
Speaker 1: a house, all right, Matt, The reason we need to
Speaker 1: talk about actually buying a home is because the difference
Speaker 1: between getting a house that you want and not getting
Speaker 1: it can be incredibly small. There are a lot of
Speaker 1: little things that can help your offers stand out and
Speaker 1: they can make the buying process go more smoothly. And
Speaker 1: most of us only buy a house once or twice
Speaker 1: in our lifetime, a few times maybe, and so we
Speaker 1: don't really know what to do. And even if we
Speaker 1: bought a house five years ago, we've completely forgotten. Things
Speaker 1: have changed and we need a helping hand. We need
Speaker 1: to kind of know what the process is like so
Speaker 1: that we can stand out when we're making an offer,
Speaker 1: and so we can actually close on the house that
Speaker 1: we want while getting the best rate in the best terms. Yeah,
Speaker 1: on our last episode, one of the things we discussed
Speaker 1: was getting a great realtor. However, different realtors have strengths
Speaker 1: and yours. You know, they may be a great alter
Speaker 1: but they may not be good at teaching you through
Speaker 1: the process of the actual purchasing process. You know, they
Speaker 1: might be great at negotiating, or they might know a
Speaker 1: neighborhood really well. But if you're the kind of person
Speaker 1: who likes to know every step of the way, like
Speaker 1: what's happening now, what's happening now, Like, certainly we would
Speaker 1: encourage you to ask, but yeah, this episode is for you.
Speaker 1: We're gonna talk through all the different little steps of
Speaker 1: submitting an offer and just all the small details that
Speaker 1: go into that. And even if you have a great agent,
Speaker 1: which is awesome, well, this is gonna help you be
Speaker 1: able to ask the right questions because an agent is
Speaker 1: often busy negotiating your deal right and getting the paperwork
Speaker 1: together and making sure that you're shown the houses that
Speaker 1: you're interested in even before that stuff happens, and so
Speaker 1: they've got a lot on their plate and it's not
Speaker 1: always based on negligence that they don't explain things well,
Speaker 1: it's because they've got a lot going on. And so
Speaker 1: this episode hopefully will give you the ability to ask
Speaker 1: the right questions so that you can stay informed during
Speaker 1: the process and make sure that you are watching your
Speaker 1: own back because obviously your agent is trying to do that,
Speaker 1: but more than anybody else's it's your responsibility to make
Speaker 1: sure that that you're going about this process correctly. So
Speaker 1: where we are now is that you've looked at tons
Speaker 1: of houses, hopefully you've maybe even looked for a month
Speaker 1: two months trying to find that right house, that that
Speaker 1: house that you know will will work for you. And
Speaker 1: so after the break, we're gonna get to the first
Speaker 1: step that is required if you want to purchase a home,
Speaker 1: and that's submitting an offer, you got to do that,
Speaker 1: all right, Matt. Let's talk about submitting an offer. And
Speaker 1: typically most people just don't think through this step enough.
Speaker 1: They don't think that submitting an offer is actually all
Speaker 1: that important. They're just trying to decide whether they're gonna
Speaker 1: submit an offer with the asking price or not. But
Speaker 1: there are all sorts of other things that you can
Speaker 1: do to make your offer more competitive and increase the
Speaker 1: likelihood of you actually going under contract on that home.
Speaker 1: And so that's what we want to do. As we
Speaker 1: talked through submitting an offer, and the first thing that
Speaker 1: you should do when you're submitting an offer is have
Speaker 1: your agent call the listing agent to kind of get
Speaker 1: a feel for what's going on. This is when having
Speaker 1: a great agent, like we talked about at the end
Speaker 1: of last week's episode can pay off majorly for you.
Speaker 1: So a personable agent can talk to the agent and
Speaker 1: kind of get a feel for whether the seller needs
Speaker 1: to move out quickly, is trying to sell a sap
Speaker 1: and you might be able to infer from that that
Speaker 1: they're actually willing to take a little bit less money
Speaker 1: if you're willing to close in two weeks as opposed
Speaker 1: to a month and a half. And maybe that's the
Speaker 1: most important thing about your offer. For sellers, it's not
Speaker 1: always about accepting the highest dollar amount. There's so many
Speaker 1: other things that go into creating a winning offer, and
Speaker 1: so we want to kind of tackle those. But that's
Speaker 1: the first thing. Have your agent called the other agent
Speaker 1: and get a feel for what's going on, Joel. A
Speaker 1: great agent will will help you to obviously communicate with
Speaker 1: the seller, and they will help convince the selling agent
Speaker 1: to want to sell the house to you. You know,
Speaker 1: they're they're there to talk you up and make you
Speaker 1: look great. Yeah, and I swear I've got an agent
Speaker 1: like that where she literally has that sort of power
Speaker 1: over people to make them want to sell me the house.
Speaker 1: And it is amazing. And a key thing that your
Speaker 1: agent will help you to do is to figure out
Speaker 1: how much to offer. Your agent can pull comps in
Speaker 1: the area, actual stays that have gone through, and we'll
Speaker 1: help you determine how much to offer. And these comparables
Speaker 1: are based on other houses, the amenities that the houses have,
Speaker 1: square footage, because what you really want to avoid doing
Speaker 1: man is coming in with a crazy low offer where
Speaker 1: you end up offending the seller and you've completely lost
Speaker 1: your chance at purchasing that home. But when you're talking
Speaker 1: with your agent about how much you should offer, just
Speaker 1: make sure to stick to your budget. Like we talked
Speaker 1: about before, it's really easy to get excited and emotionally
Speaker 1: tied to a home that you've been looking at and
Speaker 1: kind of pursuing, But it's really important to stick to
Speaker 1: your budget at the same time, because you can find
Speaker 1: yourself biting off more than you wanted to chew and
Speaker 1: that's just not a position you want to be in. Okay,
Speaker 1: so your offer, you've made it. But the fact is
Speaker 1: the seller isn't likely to accept your offer straight up,
Speaker 1: like as is. There's a good chance that there's gonna
Speaker 1: be some negotiating going on. They are likely going to
Speaker 1: submit a counter offer. It's not often that, you know,
Speaker 1: whatever price that you throw out there to the to
Speaker 1: the seller that they say, okay, all this looks awesome,
Speaker 1: they're probably gonna counter in my go back and forth
Speaker 1: a few rounds. And like, the reason I bring this
Speaker 1: up is because this is when it starts getting kind
Speaker 1: of real, you know, Joel, start biting your fingernails. Yeah,
Speaker 1: like because you think crap, Like is this what I
Speaker 1: am going to agree to pay for? And what's important?
Speaker 1: And we're gonna get to this as well. But there's
Speaker 1: a whole period of time where you can negotiate further
Speaker 1: and make amendments to your offer, specifically depending on the
Speaker 1: results of your inspection. So just know that there's more
Speaker 1: wiggle room down the road and that chances are there's
Speaker 1: going to be more negotiating and other counter offers that
Speaker 1: can be made. So real quick, let's let's say a
Speaker 1: few things that are gonna make you stand out as
Speaker 1: having a better offer than other people. And for instance,
Speaker 1: Matt and I we've talked before about putting down on
Speaker 1: a home. If you have a higher down payment and
Speaker 1: you write that into your offer and the seller then
Speaker 1: knows that you've got cash in the bank, they're much
Speaker 1: more likely to accept your offer than someone going with
Speaker 1: a three and a half percent down FH loan. Your
Speaker 1: likelihood of getting through the financing process is much greater
Speaker 1: if you've got a lot of cash, you know, sitting
Speaker 1: in the bank and you're ready to put it down
Speaker 1: towards that home. Yeah, I mean, another aspect is the
Speaker 1: earnest money, Like, this is money that you've got to
Speaker 1: put down to put towards the closing and then obviously
Speaker 1: it goes towards the total amount and do at the
Speaker 1: closing table. But you know, you could technically put down
Speaker 1: five dollars for earnest money, but the seller is probably
Speaker 1: gonna look at you and think, nah, you're crazy, Like,
Speaker 1: who are you putting down five dollars? Earn this money
Speaker 1: can typically vary between one to five percent of the
Speaker 1: purchase price. Most deals that I've done, it's just sort
Speaker 1: of just a set amount. It's like, all right, you
Speaker 1: want to put two or three grand down, or you
Speaker 1: wanna put five or seven just to make it look
Speaker 1: really strong. But generally speaking, the more earnest money that
Speaker 1: you can put down when you submit your offer, it
Speaker 1: looks more attractive to the seller because they see that
Speaker 1: you're being serious and then you're not messing around and
Speaker 1: wasting your time. Yeah, kind of an outside of the
Speaker 1: box way to make your offer look a little bit
Speaker 1: stronger too, is to write a personal letter to the
Speaker 1: seller and they want to always read it. It's not
Speaker 1: always a winner, but that's one thing that can help
Speaker 1: you stand out if two offers are incredibly similar, and
Speaker 1: I got a personal letter from someone that really fell
Speaker 1: in love with the house, wanted to talk about what
Speaker 1: their future looked like in the house, and explained that
Speaker 1: they wanted to put a garden out back, or how
Speaker 1: they wanted to eventually raise a family there someday, something
Speaker 1: like that like that would kind of tug at my
Speaker 1: heart strings. And if it was a thousand or two
Speaker 1: thousand dollars difference, or it was a difference of earnest
Speaker 1: money or something like that, like I would be much
Speaker 1: more likely to consider the person with the slightly weaker
Speaker 1: offer that submitted a handwritten note telling me how much
Speaker 1: they love the house and and you want the house
Speaker 1: you're selling to go into good hands, and so that
Speaker 1: one kind of outside of the box way to approach
Speaker 1: submitting an offer can make the difference between potentially in
Speaker 1: a tight market in a bidding war, can make the
Speaker 1: difference between you getting a house or not. Yeah, Joel,
Speaker 1: that's a great example. And that's something that Kate and
Speaker 1: I did in this house and the house ever recording,
Speaker 1: and we had reached out a few months before the
Speaker 1: house was ever even on the market, before it was
Speaker 1: even an option for them to sell. And we you know,
Speaker 1: we just touched base and kind of explained to them
Speaker 1: our situation, and you know, they kindly got back and
Speaker 1: said that they weren't in a position to sell. But
Speaker 1: guess what in the coming months when they were in
Speaker 1: a position to sell, and they knew that they were
Speaker 1: ready to get rid of the house because I mean
Speaker 1: they were living overseas. Guess who were the first folks
Speaker 1: that they contacted. It was me and my and my
Speaker 1: wife and so we in in this instance, we were
Speaker 1: able to get the home without it even going on
Speaker 1: the market, which is really key because at that point
Speaker 1: you're avoiding the competition and other folks that are also
Speaker 1: interested in the house, and that can also drive up
Speaker 1: the price. Yeah, that's pretty sweet, mat You've got a
Speaker 1: good deal on that. And also you want to consider
Speaker 1: things like the schedule of when you're closing. Like I
Speaker 1: mentioned earlier, when you're talking to your agent, if it
Speaker 1: sounds like the seller needs to be out of their
Speaker 1: home quickly, submitting an offer with a closing date that
Speaker 1: happened sooner is a better way to go, right And
Speaker 1: if you can make that happen, your offer just became
Speaker 1: a whole lot stronger, and the closing date can just
Speaker 1: be a crucial factor of whether your offer is going
Speaker 1: to be even considered or not. So, yeah, you want
Speaker 1: to make sure you kind of understand what the seller
Speaker 1: wants and submit a closing date in your offer that
Speaker 1: kind of functions in accordance with that. Yeah, and just
Speaker 1: being flexible because in your instance, you're talking about it
Speaker 1: bumping up, but it could be the exact opposite. It
Speaker 1: just depends on the seller that's oler might realize that well,
Speaker 1: they wanted to go ahead and get it listed. The
Speaker 1: fact is that they don't want to move until the
Speaker 1: end of the summer. And so if you have the
Speaker 1: flexibility to say, well, all right, that that works for us.
Speaker 1: You know, we don't need to move in until August
Speaker 1: as well, your offer just became so much more valuable
Speaker 1: in their eyes, and they're gonna want to lock that
Speaker 1: down they can move on with their life and focus
Speaker 1: on where they're gonna move next. And so these are
Speaker 1: all the key points that make your offer look good
Speaker 1: and attractive to a seller. Also baked into your offer
Speaker 1: though our contingencies, and essentially these are like escape clauses.
Speaker 1: This allows you to kind of pull that rip chord
Speaker 1: just in case things kind of get dicey, because often,
Speaker 1: especially with the first time homebuyers, you think, well, at
Speaker 1: what point can I turn back? Like is it too late?
Speaker 1: Like are we agreed to purchase this home? If we
Speaker 1: back down now, would we lose our earnest money that
Speaker 1: we've put down? Because obviously you want your offer to
Speaker 1: look really good, so you've put down a healthy amount
Speaker 1: of earnest money. And so with the help of your realtor,
Speaker 1: what you'll want to have done is put these contingencies
Speaker 1: within your offer. And these are things like your financing,
Speaker 1: inspection and appraisal contingency, Like these are all things allow
Speaker 1: you to back out of the deal if these things
Speaker 1: aren't met. And so, Joe, you wanna kick it off
Speaker 1: with the financing continguency. Yeah, it gives you some peace
Speaker 1: of mind, right, And so yeah, the financing contingency is
Speaker 1: is one that you're gonna want to have in there.
Speaker 1: You're gonna want to make sure that during that due
Speaker 1: diligence period that with the financing contingency in place, you
Speaker 1: can back out with no financial penalty to you if
Speaker 1: you aren't able to secure financing from a lender. And
Speaker 1: by the way, this due diligence period that we're talking about,
Speaker 1: I would say that an average due diligence period lasts
Speaker 1: about seven days. But make sure to ask your realtor
Speaker 1: whether there is a state law that influences the length
Speaker 1: of the due diligence period. It's a really important time
Speaker 1: for you to kind of get your ducks in a
Speaker 1: row to make sure that this is the house you
Speaker 1: still want to buy. And so as you're lining up
Speaker 1: your your financing, you'll want to get sort of your
Speaker 1: final approval for that specific house that you're making an
Speaker 1: offer on. And another thing that's important to keep in
Speaker 1: mind too, is that you want to make sure that
Speaker 1: you haven't you know, gotten new credit. Like so from
Speaker 1: the time you were preapproved. You know, talked about that
Speaker 1: in the previous two episodes ago, the things that you
Speaker 1: want to do before you purchase a home, but you
Speaker 1: want to make sure that you're not getting new credit.
Speaker 1: You want to make sure you haven't applied for a
Speaker 1: new loan. Even getting a new credit card could drop
Speaker 1: your credit score enough to where you might not qualify
Speaker 1: for that loan that you did qualify for. Even a
Speaker 1: few weeks before. Yeah, it could mean the difference between
Speaker 1: getting the house or not. And even if it doesn't
Speaker 1: mean that, it could just mean a higher interest rate
Speaker 1: for you because you pulled out some new credit and
Speaker 1: it dropped your credit score and therefore you don't qualify
Speaker 1: for quite as good of a rate. And so another
Speaker 1: huge contingency that you'll have worked into your offer is
Speaker 1: the inspection contingency. And it even allows you to back
Speaker 1: out of the house even completely if there are so
Speaker 1: many repairs that are going to have to be done
Speaker 1: and it's just more than you're willing to take on. Yeah,
Speaker 1: it's really important not to skimp on an inspection because, yeah,
Speaker 1: they're typically in the realm of three five hundred dollars,
Speaker 1: could be even more depending on the size of the
Speaker 1: home or whether it's a multifamily property. But just like
Speaker 1: a good realtor is worth their weight in gold, so
Speaker 1: is a good home inspector. You want to do your research,
Speaker 1: find a good one, and it's preferable to be there
Speaker 1: while the home inspector is looking through the home. You're
Speaker 1: gonna learn a lot about the house while you're doing it,
Speaker 1: a lot more than you can learn just from reading
Speaker 1: the report afterwards. Being there with the home inspector I
Speaker 1: have found throughout the years has been really really helpful
Speaker 1: to me. There was one time where I skipped altogether
Speaker 1: getting a home inspector out of property I was buying,
Speaker 1: and I realized that in the end it cost me
Speaker 1: a lot more than that fo I saved because when
Speaker 1: it came to the negotiations during the due diligence period, well,
Speaker 1: I didn't have a home inspection report and the claims
Speaker 1: I was making. I'd had a contractor come in and
Speaker 1: look at the home and he kind of gave me
Speaker 1: some ideas of the things that were wrong, but there
Speaker 1: was no report to go on, and so so my
Speaker 1: leverage when it came to negotiating was completely stripped away.
Speaker 1: That would be an example of being cheap over frugal, exactly, exactly,
Speaker 1: no doubt it was. It was, and I learned my lesson,
Speaker 1: like I'm always having a home inspector and so many
Speaker 1: of the other times when I bought a house, having
Speaker 1: a home inspection just helped me so much at the
Speaker 1: negotiation table, to the tune of thousands and thousands of dollars.
Speaker 1: And Johan, you mentioned kind of meeting with the inspector
Speaker 1: after the fact, and I think that's that's incredibly important
Speaker 1: as well, because in person, there's a lot more Like
Speaker 1: you said, that the inspector can communicate to you face
Speaker 1: to face, like you look at the report and there's
Speaker 1: gonna be things that are wrong with your house. That's
Speaker 1: just facts, like, it's just how it is. And especially
Speaker 1: to the first time HomeBuyer, you're gonna get that inspection
Speaker 1: report and you're gonna think this house is about to
Speaker 1: fall over because of all the write ups. Especially, Yeah,
Speaker 1: it's it's alarming. Yeah, especially in older homes like we
Speaker 1: tend to own in this area. But you know, meeting
Speaker 1: them face to face will help you to kind of
Speaker 1: rank and prioritize these fixes that that need to take place,
Speaker 1: versus you feeling like, oh, this house needs to be
Speaker 1: bulldozed because everything seems to be broken. Yeah. Completely. I
Speaker 1: feel like a first time home buyer sees the report
Speaker 1: oftentimes and and they're just totally shocked. It freaks them out.
Speaker 1: And being able to look your inspector in the eye
Speaker 1: and say, okay, translate this into plain English for me
Speaker 1: and let me know what you actually think of the
Speaker 1: home that's just so helpful for you as the buyer,
Speaker 1: and the report let that be the shocking thing that
Speaker 1: then allows you to make negotiations. But knowing what you
Speaker 1: know kind of what the home inspector thinks overall about
Speaker 1: the home is like really helpful for you as you
Speaker 1: decide whether or not to move forward. Yeah, and Joel,
Speaker 1: you mentioned negotiating, and so that's the next step. So
Speaker 1: after you have that report, essentially you can earn back
Speaker 1: all that money that you spent on the inspection and
Speaker 1: even more if there are some things that are aging
Speaker 1: or things that are completely done maybe incorrectly on the home,
Speaker 1: you know, like if you have a furnace getting ready
Speaker 1: to go out or a roof. So each one of
Speaker 1: those is five thousand dollars and so that's ten thousand
Speaker 1: dollars that you may have missed out on the opportunity
Speaker 1: to negotiate down And we're big fans of getting the
Speaker 1: dollar amount reduced, you know, adjusted off of the selling
Speaker 1: price versus having the seller actually do that work because
Speaker 1: you can work with contractors that you maybe are more
Speaker 1: familiar with. The other thing is too, is that you
Speaker 1: can have that work done on your own timeline. It's
Speaker 1: not like, well, it's like the roof is getting kind
Speaker 1: of old, but you know they could last another three years,
Speaker 1: So why not waiting another three years before we need
Speaker 1: to replace the roof or anything. With the furnace, it's like, Okay,
Speaker 1: that's an eighteen year old furnace. Chances are it's gonna
Speaker 1: be out soon, but it's working right now, and so
Speaker 1: I'm gonna be inclined to let that furnace stay for
Speaker 1: another three to five, who knows, maybe ten years. But
Speaker 1: the fact is, you want to make sure you do
Speaker 1: have that money set aside for that system when it
Speaker 1: does eventually crash. Yeah, And most sellers they don't want
Speaker 1: to be scheduling contractors and workers to come in and
Speaker 1: make prepares on their house. And so if you can
Speaker 1: find a sweet spot of a dollar amount off of
Speaker 1: the final purchase price of the home, I mean, that's
Speaker 1: gonna be the best way to do it, not just
Speaker 1: for you, put for the seller in most cases. So
Speaker 1: keep that in mind. Instead of having a laundry list
Speaker 1: of issues that you want the seller to address, just
Speaker 1: ask for money off the price of the house. And
Speaker 1: I also wanted to mention to like try not to
Speaker 1: let your emotions get the best of you, because there's
Speaker 1: gonna be a lot of negotiating. There's gonna be a
Speaker 1: lot offers going back and forth, and they're gonna say no,
Speaker 1: like are you crazy, you know, whatever they decide to
Speaker 1: tell you, and it might start to feel personal, but
Speaker 1: the fact is is it's a game. They are trying
Speaker 1: to get the best dollar for their property, and you're
Speaker 1: trying to spend as little as possible as well. So
Speaker 1: this is another reason that having a great agent will
Speaker 1: insulate you from that a little bit, because they're used
Speaker 1: to taking the responses from the sellers and sort of
Speaker 1: translating that into language that maybe your agent knows that
Speaker 1: you can handle. But yeah, just don't let it get personal.
Speaker 1: It's just about each party trying to get the best
Speaker 1: bang for their buck. You're gonna want to be aware too,
Speaker 1: that your lender is going to order an appraisal to
Speaker 1: assess the value of the house to make sure that
Speaker 1: what you're paying is the same or potentially less than
Speaker 1: what the house is worth according to an appraiser. And
Speaker 1: if for some reason that appraisal comes in lower than
Speaker 1: the agreed to purchase price, well then you have an
Speaker 1: option to either back out or to renegotiate the price.
Speaker 1: But just be aware that an appraisal is a standard
Speaker 1: thing that happens in pretty much every home buying situation.
Speaker 1: So that's a list of things that happened during due diligence,
Speaker 1: And keep in mind there's other contingencies as well, so
Speaker 1: make sure you check with your your realtor on that.
Speaker 1: And so after the break, we're gonna talk about things
Speaker 1: that happen after due diligence leading up to actually closing
Speaker 1: on the house, all right, Matt, So once due diligence
Speaker 1: is completely done with, you're gonna want to continue to
Speaker 1: work with your lender and make sure they have all
Speaker 1: the financial documents that they need to make sure that
Speaker 1: you can close on time, because, to be honest, that's
Speaker 1: a huge pain in the entire process, right is getting
Speaker 1: your tax returns, your W two's, everything over to your
Speaker 1: lender to make sure that they have all the information
Speaker 1: they need so that you can actually buy the house. Also,
Speaker 1: you're gonna want to talk to your insurance agent or
Speaker 1: your insurance company to make sure that they know that
Speaker 1: you're buying this house. They can get you a quote
Speaker 1: on homeowners insurance and just make sure that you have
Speaker 1: a policy because you're gonna need that at the closing
Speaker 1: table for this new home purchase and the next This
Speaker 1: is gonna seem kind of basic, but you want to
Speaker 1: make sure you've got your utilities and even your mail
Speaker 1: scheduled to start when you are going to close on
Speaker 1: that house. At this point in the process, the date
Speaker 1: has already been set for the actual closing, and so
Speaker 1: you want to make sure that you've got those utilities
Speaker 1: ready to go so you can maybe pick up that
Speaker 1: pizza and go sit on the dining room floor and
Speaker 1: kind of celebrate after you close. One other really important
Speaker 1: thing that you also want to make sure you have
Speaker 1: ready to go before the closing date is you want
Speaker 1: to make sure that you have received your wiring instructions
Speaker 1: so that way you can have the funds where they
Speaker 1: need to be by the specific date. And Joel I
Speaker 1: mentioned this out of personal experience because the first investment
Speaker 1: property that Kate and I purchased, we totally slacked. And
Speaker 1: I don't know if it's that we slacked, or if
Speaker 1: the lender slacked or what, but we did not receive
Speaker 1: the wiring instructions or if we did. We skipped over
Speaker 1: that email and we showed up at the closing table,
Speaker 1: signed all the documents and they were asking, all right,
Speaker 1: like we're the funds, like they should be here by now, right, dude,
Speaker 1: We did not have the funds wired over and it
Speaker 1: was at the end of the day, and we thought
Speaker 1: we were gonna lose the deal because of this small detail,
Speaker 1: even though it was tons and tons of money, because
Speaker 1: it was a huge John payment, but you want to
Speaker 1: make sure you've got that set up. You want to
Speaker 1: make sure there's no last minute snaphoos. In our case,
Speaker 1: the closing attorney they just made some adjustments to the
Speaker 1: all the clothes documents and everybody was super cool. We
Speaker 1: were so nervous though, we thought for sure that we
Speaker 1: had lost the deal. And one thing on wiring funds,
Speaker 1: I just wanted to quickly mention that there are actually
Speaker 1: a lot of scams out there. There are some sophisticated
Speaker 1: scammers that have figured out when individuals are closing on
Speaker 1: a home and they are sending an email asking for
Speaker 1: funds to be wired and they're siphoning forty fifty sixty
Speaker 1: a hundred thousand dollar down payments from people, and there's
Speaker 1: just no recourse once you get scammed and wire your
Speaker 1: funds to a scam artist. And so just be aware
Speaker 1: when you do get an email, it's best to call
Speaker 1: your agent and call the closing attorney just to make
Speaker 1: sure that you have the right instructions in hand. So
Speaker 1: it's just something to kind of be aware of. Yeah,
Speaker 1: that's crazy, man, I've never heard of that. So now
Speaker 1: that we got that out of the way, let's talk
Speaker 1: about the actual closing date and what someone buying a
Speaker 1: home can expect. Yeah, Joe, this is like the actual
Speaker 1: date that you go into sign all the documents to
Speaker 1: purchase the house. And so typically this is at an
Speaker 1: attorney's office and they're the ones who've put together all
Speaker 1: the documents, all the all the legal papers, and most
Speaker 1: of those are required specificically by the lender, assuming that
Speaker 1: you're financing the house. But just be ready to spend
Speaker 1: at least an hour signing form after form. There are
Speaker 1: so many of them. And keep in mind to as
Speaker 1: you're signing all these documents, if there's something that you
Speaker 1: don't understand or something that sounds kind of weird to you,
Speaker 1: just ask the closing attorney and man and all the
Speaker 1: deals that we've ever done. The closing attorneys have been
Speaker 1: so incredibly patient and kind, and I guess they're just
Speaker 1: used to it. They're used to focus being in there,
Speaker 1: not knowing what they're doing. They're signing their names on
Speaker 1: all these papers, and I found that they're really experienced
Speaker 1: when it comes to quickly explaining what it is that
Speaker 1: you're signing. All right. So a big question that most
Speaker 1: buyers have when they're at the closing table or even
Speaker 1: before is who pays for what? And usually the closing
Speaker 1: costs are paid by the buyer, So if you're the
Speaker 1: one buying the home right, you're usually paying the closing
Speaker 1: costs unless you have written that into the offer. And
Speaker 1: in an intense market, you're typically not asking for closing
Speaker 1: costs to be paid by the seller. But in a
Speaker 1: more lax in a more buyers market, you might be
Speaker 1: asking for closing costs from the seller, but just know
Speaker 1: that that's typically paid the buyer unless you've put that
Speaker 1: in the offer and it's been agreed to by the seller.
Speaker 1: Real turpees are typically paid by the seller, again, unless
Speaker 1: something different has been made clear in the offer that
Speaker 1: you made earlier. Edul And additionally, those numbers should be
Speaker 1: spelled out in your closing documents that you receive ahead
Speaker 1: of time. That way, it's not the sort of last
Speaker 1: minute a bit of information that you get surprised with
Speaker 1: at the closing table. Yeah, your lender is going to
Speaker 1: send you essentially a closing disclosure that will fill you
Speaker 1: in on all the numbers, including the exact amount that
Speaker 1: you are going to need to bring to the closing table,
Speaker 1: so you know exactly how much you need to be
Speaker 1: wiring uh to the closing attorney. Right Also too, we're
Speaker 1: talking about the closing table. The seller may or may
Speaker 1: not be sitting directly across from you at the table.
Speaker 1: It just depends. I've had friends when they purchased homes
Speaker 1: they never got to meet the seller, like they're in
Speaker 1: a completely different room. And most instances where we've purchased,
Speaker 1: we were literally sitting across the table, and that can
Speaker 1: actually be a kind of cool time to talk to
Speaker 1: them and get to know little quirks and weird things
Speaker 1: about the house. We've gotten, like our alarm codes at
Speaker 1: that point before, and we've kind of gotten the scoop
Speaker 1: on neighbors that live on either side of the house
Speaker 1: and just kind of getting that insider information, like directly
Speaker 1: from the previous owner to be really helpful and sort
Speaker 1: of like this cool passing of the torch. Yeah, for sure,
Speaker 1: I found I found it to be kind of the
Speaker 1: same whether it's an investment property or a personal property.
Speaker 1: Just kind of talking to the previous owner is super helpful.
Speaker 1: And I always like, hope they're there, right because I
Speaker 1: learned a little bit more so once you're done, whether
Speaker 1: right hand or left hand, in either hand is just
Speaker 1: going to be completely destroyed at the end of closing,
Speaker 1: right because you will have signed so many documents, and
Speaker 1: I think some closing attorneys are moving towards, you know,
Speaker 1: more electronic signatures at the closing. That's gonna happen more
Speaker 1: and more. But for right now, in most instances, your
Speaker 1: hand is gonna be incredibly worn out, so put some
Speaker 1: ice on that. But at that point, with a fatigued hand,
Speaker 1: you now are the proud owner of a house and
Speaker 1: that is exciting stuff. Yeah, man, that's when you get
Speaker 1: the keys, Like, that's the moment you've been working towards.
Speaker 1: Right now. I mentioned this the second ago, but Pizza
Speaker 1: Kate and I had this tradition of after closing, we
Speaker 1: would go and get a pizza, go to the new
Speaker 1: place and enjoy the pizza, kind of sit on the
Speaker 1: counters in the kitchen or maybe sit on the floor
Speaker 1: in the dining room and sell alebrate the fact that
Speaker 1: you've achieved this point, Like you've been working hard towards this. Obviously,
Speaker 1: you've been saving up a lot of money for a
Speaker 1: down payment, you've been looking for a house, you've gone
Speaker 1: through the entire closing process, and now you get to
Speaker 1: you get to finally take it all in and enjoy it. Yeah,
Speaker 1: homebuying can feel almost like a war of attrition, and
Speaker 1: so celebrating after a victory is huge because not only
Speaker 1: did you just deal with the closing table and just
Speaker 1: kind of the intensity that that can be, but really, yeah,
Speaker 1: it is having saved up for that down payment, found
Speaker 1: the house, gotten financing, made a solid negotiation, gotten an inspection,
Speaker 1: done all those things. You've gone through the entire process,
Speaker 1: and it is a beast of a process. And so yeah,
Speaker 1: you celebrate whether it's pizza or whatever. But typically, yeah,
Speaker 1: all you're waiting to move all your furniture in and
Speaker 1: all that stuff, and so pizza is just the easiest
Speaker 1: way to go it's handheld foods. That's the way to
Speaker 1: go after after closing, Okay, and then next you're moved
Speaker 1: into the house, you're getting all settled in, you don't
Speaker 1: want to forget to file for homestead exemption, and that's
Speaker 1: the status that you can file with your state that
Speaker 1: basically lets them know that this is our primary residents,
Speaker 1: we're living here are it's our homestead, and that gives
Speaker 1: you a huge discount on your taxes every year this
Speaker 1: and save you hundreds and hundreds of dollars. So don't
Speaker 1: forget to do that once you've moved into your house.
Speaker 1: Buying a house is an intense experience, but owning a
Speaker 1: home is such a really cool feeling. We've talked before
Speaker 1: about how owning a home isn't always the best investment, right,
Speaker 1: and that's because we're putting a lot of our financial
Speaker 1: eggs in one basket, and a home is not something
Speaker 1: that appreciates at the same rate as the stock market,
Speaker 1: so we can't really consider an investment. But it can
Speaker 1: be such a good move for us as humans right
Speaker 1: to be able to be settled in one place, in
Speaker 1: a place that we want to call home for a
Speaker 1: long period of time. But it is important as we
Speaker 1: think about the fact that it's not a great investment,
Speaker 1: to make sure that we aren't becoming house poor in
Speaker 1: this process of buying a home, so that we're not
Speaker 1: spending too much, because it can be a budget killer,
Speaker 1: and if too much of a percentage of your income
Speaker 1: is dedicated to this home purchase, it's gonna make living
Speaker 1: and making your budget work every month just that much harder,
Speaker 1: not to mention preventing you from reaching other financial goals
Speaker 1: that you have. Yeah, Joe, I couldn't agree more a right,
Speaker 1: like housing like that is still the number one expense
Speaker 1: that we have built in our budgets every single month,
Speaker 1: So keeping tabs on that and making sure you're keeping
Speaker 1: that under control is so incredibly important. All right, Matt,
Speaker 1: I feel like that's nuts to bolts, that's beginning to end.
Speaker 1: That's how you buy a house, right, and you do
Speaker 1: it in a way that's effective, that's smart, that takes
Speaker 1: into account the big things and the little things to
Speaker 1: put you in the best position to get a good deal. Yeah,
Speaker 1: that's right, man. So now you can just go out
Speaker 1: and buy a house. Do it. Just do it. It's
Speaker 1: that easy, all right, man. I'm gonna kick it back
Speaker 1: to the beer today. We are drinking Boulevard Brewing companies
Speaker 1: Space Camper, and I'll go ahead and say, the first
Speaker 1: thing I noticed about this can is it's got this
Speaker 1: redheaded lady on the front of it, and she looks
Speaker 1: like the girl from Wendy's Fast Food Wendy's, except she's
Speaker 1: in some sort of cosmic space house. She's in the
Speaker 1: space suit. But if she'll serve me a burger and
Speaker 1: fries with this beer, perfect combo. What do you think
Speaker 1: about this beer? Yeah? I felt like this was Boulevards
Speaker 1: take on kind of the new style of I p
Speaker 1: A that's juicier, less bitter, less ALTI and it really
Speaker 1: did kind of straddle that line really nicely, this kind
Speaker 1: of beer that someone could go to as like an
Speaker 1: everyday drinker. I just want an I p A that's
Speaker 1: super good and super easy to drink. This beer kind
Speaker 1: of encompasses that in my opinion. Yeah, it's only at
Speaker 1: five point nine alcohol, which, yeah, it's a it's a
Speaker 1: fairly lighter beer and it drinks lighter to it. It's
Speaker 1: pretty refreshing in a sense. So like you said, it's
Speaker 1: something that you can drink every day, and I'm totally
Speaker 1: with you. It doesn't have that West Coast bitterness, so
Speaker 1: it makes it really easy to drink super solid juicy.
Speaker 1: I totally dig it. Thanks to all of our friends
Speaker 1: out there at Boulevard Brewing Company and especially to Hillary
Speaker 1: for sending these along. All right, Matt, let's get to
Speaker 1: our final thoughts for this episode of actually buying a home.
Speaker 1: And one of the most important things you need to
Speaker 1: consider is making a strong offer, and so I think
Speaker 1: we outlined pretty well what that means. There are a
Speaker 1: lot of little things you need to consider when placing
Speaker 1: your offer. Those small little things can be the difference
Speaker 1: between getting the house or not. And it's not always
Speaker 1: even about offering the most money and really quickly. One
Speaker 1: of the most important things you want to make sure
Speaker 1: that you don't skip on during your due diligence period
Speaker 1: is the inspection. Having an inspection it basically gives you
Speaker 1: the footing to further negotiate down the offer price. There's
Speaker 1: gonna be things that you find that are gonna be
Speaker 1: wrong with a home, and to have that report that
Speaker 1: you can refer to point to and say, hey, like
Speaker 1: this is something that costs five thou dollars this, This
Speaker 1: is gonna cost another two grade right here. Those are
Speaker 1: real dollars that you're going to be able to subtract
Speaker 1: from your purchase price. So make sure you pay for
Speaker 1: a solid inspection. Yeah, and a solid inspection might also
Speaker 1: reveal that the house has too many issues that you're
Speaker 1: just not willing to deal with, and it's a signal
Speaker 1: to you to walk away. But ultimately, you don't want
Speaker 1: to be house poor, right, Spending too much on a
Speaker 1: home can be a budget killer, and having too much
Speaker 1: of a monthly obligation towards a home, even though owning
Speaker 1: your own home can provide such a sense of satisfaction
Speaker 1: and the potential to have longevity in one single place,
Speaker 1: I mean, there's a lot of beauty in owning a home.
Speaker 1: You also don't want to mortgage your financial future by
Speaker 1: overpaying in order to get that sense of place. And
Speaker 1: keep in mind that the largest percentage of our monthly
Speaker 1: budget goes towards housing, so you want to make sure
Speaker 1: that you're reining in what you're willing to spend on
Speaker 1: your monthly mortgage because you want to make sure you
Speaker 1: have money that allows you to do other things. Like
Speaker 1: saving and investing, as well as just doing fun stuff
Speaker 1: like traveling and reaching your other financial goals. And so,
Speaker 1: like most things in life, you want to make sure
Speaker 1: you find that balance. So Joel, that's gonna be it.
Speaker 1: For this episode, we will have our shown us up
Speaker 1: at how to money dot com. Be sure to check
Speaker 1: them out. And if you've enjoyed the show, we would
Speaker 1: love to hear from you. We'd love it if you
Speaker 1: would consider leaving a review on Apple Podcasts. And if
Speaker 1: you think that Matt and I have some room for improvement,
Speaker 1: go to how the Money dot com slash do better.
Speaker 1: We love to read your feedback there as well, and
Speaker 1: here your constructive criticism. It just makes us better podcasters.
Speaker 1: That's right, man. So until next time, best Friends Out,
Speaker 1: Best Friends Out, bo